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UK-based telecoms group Vodafone has suffered falling revenue in its biggest market Germany as chief executive Margherita Della Valle attempts a major turnaround of the business.
The division in Germany was hit after the government prevented housing associations from bundling television with rent in a new law that came into force in July.
The FTSE 100 company’s shares fell 4 per cent to 70.13p in early morning trade on Tuesday in London.
Organic service revenue — a key metric including sales from contracts, network use and roaming — fell 6.2 per cent in Germany, slightly exceeding analysts’ forecasts in the three months to September 30.
However, overall revenue rose, helped by growth in the company’s Turkish and African markets.
Vodafone posted a 4.2 per cent increase in organic service revenue in its second quarter, nudging ahead of an analyst consensus of a near-4 per cent rise.
Della Valle said the company’s performance had been undermined by the TV law change as expected and that it was investing in Germany to strengthen its market position. She added that it continued “to make good progress on our strategy to change Vodafone”.
After she took over last year Della Valle said Vodafone needed to boost its business in Germany and take action in European markets that were not earning above their cost of capital.
The group has since announced the sale of its Spanish and Italian businesses as well as the planned merger of its domestic operations with CK Hutchison’s Three UK.
Vodafone maintained its guidance for its 2025 financial year of adjusted earnings before interest, taxes, depreciation and amortisation after leases of about €11bn and adjusted free cash flow to be at least €2.4bn.
It also posted 1.2 per cent organic service revenue growth in the UK compared with analysts’ expectations of an uptick of 0.72 per cent.
The UK competition regulator last week paved the way for its proposed domestic tie-up with Three UK as long as the companies addressed competition concerns. The Competition and Markets Authority said it was seeking feedback on remedies before making its final decision by December 7.
Della Valle said the approval processes for its transactions in the UK and Italy were “nearing conclusion” and would “complete our programme to reshape the group for growth”.
